Tax commission releases report

Posted on December 19, 2012 by Kentucky Chamber Blog

Revenues could rise by an additional $659 million annually under a set of recommended changes to how Kentucky employers and citizens are taxed. These recommendations were sent to Gov. Steve Beshear on Monday by the 16-member Blue Ribbon Commission on Tax Reform. The commission, chaired by Lt. Gov. Jerry Abramson, held 15 public meetings, including one each in each congressional district, with the intent of conducting an extensive review of Kentucky’s tax code and providing the governor with a set of recommendations to create a more competitive, equitable and adequate tax code.

Business taxes

For businesses, the top corporate tax rate would be lowered from 6.0 to 5.8 percent. Small businesses could see an increase in their taxes based on a recommendation by the Commission to lower the Limited Liability tax exemption from $3 million to $1 million. This will broaden the base by requiring approximately $14 million more from small companies with between $1 million and $3 million in gross revenues.

To help encourage job creation and investments in the Commonwealth, the Kentucky Chamber urged the commission to adopt single factor apportionment based on sales, rather than the current three-factor formula of sales, property and payroll for determining taxes. Also included is a recommendation to include an angel investment tax credit to help create investment in small business start-up companies.

Income taxes

Under the proposed recommendations, individuals who earn over $8,000 per year would see a slight reduction in their individual income taxes. The retiree income tax exemption, which is currently at $41,100, would be lowered to $30,000 annually. For the working poor, the recommendations propose the state create an earned income tax credit (EITC) at 15% of the federal EITC. One of the most significant proposals for individuals is a limit of $17,500 in itemized deductions including charitable contributions, necessary medical expenses and home mortgage interest.

Utility taxes

Kentucky’s residents and businesses would also pay more on their monthly utility bills based on a recommendation to place a one percent gross receipts tax on all residential and business utility bills with the proceeds dedicated to the SEEK formula, which is the day-to-day funding of Kentucky’s education system. This proposal would raise over $100 million annually for education, but hit Kentucky’s energy intensive industries like auto manufacturers and aluminum industries significantly. A recommendation to expand Kentucky’s current 6% sales tax to certain household “luxury” services, such as country club memberships is also included in the report. 

Tax relief for signature industries

Two of Kentucky’s signature industries could see some tax relief under the recommendations. Kentucky’s distillery industry would benefit from a repeal of the distilled spirits case sales tax, and most importantly a recommendation to create an income tax credit for the bourbon industry to offset the property tax on stored barrels of bourbon. Kentucky’s horse industry could benefit under a recommendation to exempt the sales and use tax on certain equine products such as hay, feed, grooming supplies and fertilizer.

Tobacco tax

For health advocates, the commission recommended raising Kentucky’s cigarette tax from 60 cents per pack to $1 per pack. 
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To view the full set of recommendations and all presentations to the commission, click here.

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Health providers express concern over Medicaid Managed Care implementation

Posted on December 17, 2012 by Kentucky Chamber Blog

Medicaid Managed Care is achieving its goal of saving Kentucky money, but health providers continue to express concerns about the implementation. During an Interim Joint Committee Meeting on Health and Welfare, State Medicaid Commissioner Lawrence Kissner told legislators the Medicaid Managed Care system is $40 million under budget through October, saving approximately 2%.

However, there were many questions to the Commissioner regarding the oversight of the managed care companies by his Cabinet. Senate Health and Welfare Chairwoman Julie Denton stated there were significant concerns from hospitals, doctors and pharmacies indicating a number of overdue bills are not being paid and urged the Cabinet to resolve these problems. In response, Kissner stated two managed care companies are now under corrective action plans with the Department of Insurance for failing to pay claims. Rep. John Will Stacy, who owns pharmacies in eastern Kentucky, told the Commissioner if payments are not going to be made in a timely fashion, the number of providers will drop. 

Medicaid Managed Care is projected to save the state $1.3 billion in Medicaid costs. One company, Kentucky Spirit, announced it was going to break its contract because it was losing money and claimed the state gave incorrect information when they made their bid. Commissioner Kissner wouldn’t comment on this because it is an ongoing legal issue. 

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Unfunded pension system threatens Kentucky’s future

Posted on November 9, 2012 by Kentucky Chamber Blog

For more on the pension situation, visit the Kentucky Chamber’s website.

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Adkisson and Holliday visit Bowling Green to discuss academic standards

Posted on August 22, 2012 by Kentucky Chamber Blog

Kentucky Chamber President and CEO Dave Adkisson and Kentucky Education Commissioner Terry Holliday continued to promote Kentucky’s new tougher academic standards last week during a presentation to the Bowling Green Chamber of Commerce.

“There’s no more important partnership than between education and business right now,” said Holliday. Click here to read coverage of the presentation in the Bowling Green Daily News.

The visits by Holliday and Adkisson have been ongoing since last fall. The Chamber and Department of Education are partnering on this initiative through a grant from the Bill and Melinda Gates Foundation. The objective of the visits is to ask the business community to support educators in enforcing the new academic standards. Students were tested using the new standards in May. When the test results are published in October, Holliday expects pushback from parents, teachers and even legislators due to lower-than-normal scores.

“When the letters to the editors start saying these standards are too hard, we want our business leaders to write letters to the editor in response. We want them to stand up and say ‘this is important to the future of Kentucky and we need to stay the course,’” said Holliday in a video discussing the importance of the standards.

The Chamber developed a kit as part of the effort to raise support, offering communications tools that Kentucky employers can use to let their employees know about the new standards and what they mean for their communities and state. The kit, which includes such items FAQs, a sample newsletter item, an example of an e-mail message and resource information, is available here. To order a hard copy, contact ahiller@kychamber.com. The Kentucky Chamber Foundation also produced an informational brochure titled New Standards, New Tests and New Scores on the new standards. Both the kit and the brochure are available for download now.

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Chamber files comments supporting ORSANCO proposal

Posted on August 16, 2012 by Kentucky Chamber Blog

The Kentucky Chamber of Commerce filed comments last month to the Ohio River Valley Water Sanitation Commission (ORSANCO) supporting its proposal to remove the acute aquatic life criterion for selenium from its Pollution Control Standards. ORSANCO has proposed the removal of its acute aquatic life criterion for selenium of 20 µg/L in its 2012 proposals. ORSANCO has noted that the current acute criterion for selenium is outdated, and U.S. EPA is in the process of preparing to issue new selenium criteria.

The Kentucky Chamber fully in its comments supported this move by ORSANCO for the following reasons:

  1. U.S. EPA has acknowledged that the 20 µg/L acute aquatic life criterion for selenium is not scientifically supported.  Because the latest scientific data and information does not support the acute criterion, there is no regulatory basis to retain that criterion in ORSANCO’s Pollution Control Standards.  See 69 Fed. Reg. 75541, 75544 (Dec. 17, 2004).  In fact, more recent acute toxicity testing yielded a substantial (more than one magnitude) increase in the selenite criterion to 258 µg/L.
  2. States that border the Ohio River have begun to move forward to remove the acute aquatic life criterion of 20 µg/L that was previously recommended by U.S. EPA in 1987 from their water quality regulations on the basis that the standard is not supported by the latest scientific data and information.  It is important for ORSANCO and states that border the Ohio River to have consistent water quality standards where supported by sound science.  This represents an appropriate opportunity for ORSANCO to revise its Pollution Control Standards to be consistent with those states that have also recognized that the acute criterion for selenium is outdated.
  3. U.S. EPA is poised to publish revised water quality criterion for selenium that will take into consideration the latest scientific data and information in accordance with Section 304(a) of the Clean Water Act.  Accordingly, recommended criteria will soon be available to replace the outdated selenium criteria. (Although ORSANCO has not proposed to remove the 5 µg/L chronic aquatic life criterion, it is also outdated and will likely be replaced by a fish tissue whole body weight standard.)

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New changes in GASB rules could help states transition to defined contribution plans

Posted on July 25, 2012 by Kentucky Chamber Blog

On Tuesday the Kentucky General Assembly’s Public Employee Pension Task Force received some good news from the Pew Center. The Commonwealth could potentially save a significant amount of money and ensure the viability of the public employee pension system if lawmakers create a defined-contribution or hybrid retirement plan for new state employee hires.

The Government Accountability Standards Board (GASB) made changes to their accounting methods; specifically, the way pension systems calculate the liabilities as it relates to annual required contribution (ARC). In the past, the pension plans have been judged based on the percentage of the ARC which is funded. Under the new rules, GASB will require plans to put a new “net pension liability” figure directly on the balance sheets, in addition to the funding projections.

This is great news, according to Pew, because it eases the “transition costs” of moving from a defined benefit plan to a defined contribution plan for new hires, a proposal supported by the Kentucky Chamber. Under the new GASB rules, states can take longer to fully fund the “ARC” for those under the defined benefit plan and no longer have to front load all the costs of running both a defined benefit plan for existing employees and a defined contribution plan for new hires.

The Public Employee Pension Task Force is charged with producing a report to the legislature in December 2012 with recommendations on how to address the state’s growing unfunded pension liability problem. The next monthly meeting is scheduled for August 21 in Frankfort and will also be televised on KET.

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Begala, Kristol take on 2012 elections and more at Annual Meeting

Posted on July 10, 2012 by albledsoe

Paul Begala and William Kristol are opinionated political analysts on opposite sides of most issues, but there’s one important issue where they both missed the mark during interviews with the Kentucky Chamber in March: Neither picked the University of Kentucky basketball team to win the NCAA Men’s Basketball Tournament. Perhaps their visit to Kentucky this July to speak at the Kentucky Chamber’s Annual Meeting will help them make more informed bracket choices in the future.

Begala, a populist Democrat who served as counselor to President Clinton in the White House, will sound off against Kristol on July 17 at the Louisville Marriott Downtown, where the two will discuss the presidential election race and other major national and global affairs.

We sat down with Kristol, a neoconservative Republican who served as chief of staff for then-Vice President Dan Quayle, and Begala and asked them to weigh in on everything from politics in the Commonwealth to the greatest worries for the U.S. Both Begala and Kristol say they’re looking forward to sharing the stage.

“He’s a fairly smart person,” Begala says of Kristol. “We don’t agree on much politically, but analytically we don’t disagree that much. I’m a huge Bill Kristol fan, so it will be fun.”

Kristol said he and Begala will debate and tease each other, but “sometimes we actually end up agreeing analytically on what’s likely to happen. I always try to put it in a little bit of a historical perspective, and how do we understand this moment we’re in.”

Though Begala and Kristol may occasionally agree, Begala says they won’t let the other one-up them: “Each of us will always want the last word, ‘Oh, here’s one more thing about Afghanistan!’”

Read more

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Kentucky Chamber supports critical work of Kentucky Cancer Foundation

Posted on July 2, 2012 by Kentucky Chamber Blog

The Kentucky Chamber of Commerce today announces its support of the Kentucky Cancer Foundation (KCF), a non-profit foundation created to reducethe burden of cancer on Kentuckians by funding evidence-based prevention and early detection services for the uninsured and under-insured. KCF’s mission is to ensure that all Kentucky citizens have access to life-saving preventative and early detection cancer services, regardless of their financial situation.

This work implements priorities of the Kentucky Cancer Action Plan, a guiding document for organizational efforts in cancer prevention, early detection, treatment, and quality of life. The plan is developed and maintained by the Kentucky Cancer Consortium (www.kycancerc.org), Kentucky’s statewide comprehensive cancer control coalition made up of over 40 organizations working together to reduce cancer in the Commonwealth.

Kentucky is one of the worst states in the nation for cancer. Each year, there are more than 24,000 new cancer cases and 9,500 Kentuckians die from the disease. Not only does our high cancer rate reduce the quality of life for our citizens and drain families, it also has a significant fiscal impact on state government. As the Kentucky Chamber highlighted in its Building a Stronger Bucket report, Medicaid spending grew about three times faster than the overall state budget from 2000 to 2012 (117% vs. 41.4%). Increasingly, Medicaid dollars are being used to treat cancer.

Research has shown that spending more money to treat existing illnesses isn’t the long-term answer, but rather making strategic investments in health promotion and disease prevention. KCF’s cancer prevention efforts will primarily target lung, breast, cervical and colon cancers, which account for 54% of all cancer deaths in Kentucky. Its first project is a public-private partnership with state government to screen 4,000 uninsured Kentuckians for colon cancer. Through private donations and grants, the foundation will match the state’s $1 million investment over the biennium. If found early, treatment costs for colon cancer average $30,000 for a patient, while costs for a patient with late stage cancer are estimated at $120,000. In many cases, screening can also prevent colon cancer altogether.

If you would like to learn more about KCF or contribute to the foundation, please contact Jack Hillard at (859) 489-9135 or jackehillard@yahoo.com.

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New laws go into effect July 12

Posted on July 2, 2012 by Kentucky Chamber Blog

New laws approved during the Kentucky General Assembly’s 2012 regular session will take effect on July 12. The Chamber recommends Kentucky companies stay in compliance by reviewing those laws that may have an impact on the business community by referencing our Results for Business – a full breakdown of what passed, what didn’t and what it means to your business.

The Kentucky Constitution states that legislation approved by the General Assembly goes into effect as state law 90 days after a legislative session ends, unless a bill specifies a different effective date or contains an emergency clause that makes it effective as soon as it is signed by the governor.

Among those laws, is SB 3, Kentucky’s new effort to curb abuse of the drug pseudoephedrine, a key ingredient used in making methamphetamine. Unlike the prescription mandate opposed by the Chamber, SB 3 further limits the over-the-counter purchase of cold and allergy medication containing pseudoephedrine to 7.2 grams monthly and 24 grams annually. This legislation is a reasonable compromise to the effort over the past two years to mandate a prescription, which would have unnecessarily increased employer health care costs and employee absenteeism.

Also of interest to Kentucky businesses will be the new requirements to address prescription drug abuse, which has proven to be a serious problem for employers in the Commonwealth who need a reliable and drug-free workforce. HB 1 (Extraordinary Session) addresses the prescription drug epidemic by strengthening the state’s KASPER system and cracking down on pain clinics. Prescription drug abuse is not only a social issue; it is a business issue. From a loss of productivity to creating serious workplace safety concerns to increasing Kentucky’s workers’ compensation premiums, prescription drug abuse is having a negative impact on jobs.

To view a complete list of business issues that passed this session, click here.

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What does Kentucky’s business community want out of the 2012 Kentucky General Assembly?

Posted on December 21, 2011 by Kentucky Chamber Blog

This year, the Kentucky Chamber’s policy councils have placed special emphasis on policies that warrant immediate action and yield long-term benefits for the Kentucky business community. It’s time to get Kentuckians back to work with policies that will promote economic growth, because growth cannot be sustained without proper policies to support it.  

On January 3, as the 2012 General Assembly begins, Kentucky Chamber policy advocates will work directly with legislators to create policies that will:

  • support career and technical training.
  • raise the high school drop-out age from 16 to 18.
  • uphold new, tougher academic standards.
  • promote quality teaching – reward great teachers, remove bad teachers.
  • implement performance funding for new investment in higher education.
  • promote sound budgeting – adhere to the Chamber’s spending principles.
  • reform public pension systems to put them on sound financial footing.
  • stop prescription drug abuse.
  • reduce smoking and improve health and productivity.
  • promote a competitive tax climate – reform taxes that hinder job growth.
  • allow our horse industry to compete through expanded gaming.
  • encourage business investment through angel investment and economic development plans.
  • address unemployment interest payments in an employer-friendly manner.
  • promote cleaner coal as a key source of reliable energy.
  • support low-cost energy by protecting the current Public Service Commission structure.

Download the Chamber’s 2012 Legislative Agenda for a detailed look at the business community’s 2012 priorities.

Learn more at Kentucky Chamber Day

On January 5, two days after the opening of the legislative session, Kentucky Chamber Chairman Luther Deaton and President and CEO Dave Adkission will discuss these and other issues facing the business community at the 17th Annual Kentucky Chamber Day, presented by Fidelity Investments. The governor and the state’s top four legislative leaders have also been invited to share their visions for Kentucky’s economy, government and politics in the year ahead. Register now for this must-attend event.

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